Total of BS of Assets side in question given $82,000 while it comes $82,200 No repayment...

Transcribed Image Text:

Total of BS of Assets side in question given $82,000 while it comes $82,200 No repayment of loan and payment of interest. 1 Step 1 Prepare a Purchase Budget First Store Purchase Budget For the quarter ending June 30, 2021 April May June Quarter Total Calculations Budgeted Sales (As provided on Part1) S 50,000 $ 60,000 $ Current Cost of goods sold S 24,500 S 29,400 S Desired ending inventory S 35,280 $ 41,160 $ Total inventory needs S 59,780 S 70,560 $ 70,000 $180,000 34,300 S 88,200 52,920 S 52,920 87.220 50000*49% 29400*120% =60000*49% =70000*49% =34300*120% =90000*49%*120% 141,120 S 29,400 $ 35,280 S 41,160 $ 29,400 24500*120% S 30,380 $ 35,280 S 46.060 111,720 Less beginning inventory Budgeted Purchases 2 Step 2 Prepare Cash Receipt Schedule First Store Schedule of Budgeted Cash Collection For the quarter ending June 30, 2021 April May June Quarter Total Calculations 50% of current month's sales S 25,000 $ 30,000 S 35,000 $ 90,000 50000*50% =60000*50% =70000*50% 40% of last month's sales $ 16,000 S 20,000 $ 24,000 $ 60,000 =40000*40% =50000*40% =60000*40% 10% of sales two months prior S 5,000 S 4,000 $ 5.000 $ Total cash receipts S 46,000 $ 54,000 S 64,000 14,000 50000*10% 164,000 =40000*10% =50000*10% 3 Step 3 Prepare a Cash Disbursement Schedule First Store Schedule of Cash Disbursements For the quarter ending June 30, 2021 April May June Quarter Total Purchase of merchandise prior month S Current cash operating expenses S 25,480 $ 28,000 S 30,380 S 28,000 S 35,280 S 91,140 28,000 $ 84,000 (25000+1000+2000) Cash dividends S 5,000 Total cash disbursements S 58,480 $ 58,380 $ S 5,000 63.280 $180,140 4 Step 4 Prepare a cash budget First Store Cash Budget For the quarter ending June 30, 2021 Calculations April May June Quarter Total Calculations Cash balance, beginning S 1,000 $ 1,520 S Total cash receipts (See Budget #2) S 46,000 $ 54,000 S Total cash disbursements (See Budget #3) S 58,480 $ 58,380 $ Excess (Deficiency) cash available over disburse $ (11,480) $ (2,860) S 1.140 S 64,000 $164,000 63.280 1,860 1,000 180.140 (15,140) Short tem financing: New loans S 13,000 $ 4,000 S 17.000 Repayments S S Interest S S Cash balance, Ending S 1.520 S 1.140 S 1,860 S 1.860 5 Step 5 Prepare budget income statement First Store Budget Income Statement For the quarter ending June 30, 2021 April May June Quarter Total Calculations Sales Cost of Sales S 50,000 $ 60,000 $ 70,000 180,000 S 24,500 S Gross profit S 25,500 $ 29,400 S 34,300 S 30,600 S 88,200 35.700 S 91,800 Expenses: Wages and salaries expenses S 25,000 $ 25,000 $ 25,000 $ 75,000 Depreciation expense Utilities expense Rent expense Insurance expense S 200 $ $ 1,000 $ 200 S 200 S 600 1,000 S 1,000 S 3,000 S 2,000 $ 2,000 $ S 300 $ 300 S Interest expense S 130 S 170 S 2,000 S 300 S 170 S 6,000 900 =1800/6 470 (13000*12%)/12 = (17000*12%)/12 S 170 Total expenses S 28,630 S Net income S (3,130) S 28,670 S 28,670 S 1,930 S 7,030 S 85,970 5,830 6 Step 6 Prepare a budgeted balance sheet First Store Budgeted Balance Sheet June 30, 2021 Assets Liabilities Cash S 1.860 Accounts payable $ 46,060 Accounts receivable Inventory S 41,000 S 52.920 Dividend payable S 5,000 Loan payable $ 17.000 Prepaid Insurance S 900 Interest payable S 470 Net Fixtures S 24,400 Total liabilities S 68.530 Stockholders equity: Common stock S Retained earnings S 15,720 36,830 $ 52,550 Total assets $ 121,080 Total liab. And stockholders S 121,080 AR ending balance: Beg. AR $ 25,000 Add quarter sales $ 180,000 Less collection from AR $ 164,000 Ending AR S 41,000 Prepaid Insurance: Beg. S 1.800 S S 900 900 Less expired Ending balance Net Fixtures: Beg. Less dep Ending Retained earnings: Beg. Add net income Less dividend Ending sss 25,000 600 24,400 $ 36,000 S 5,830 S 5,000 $ 36.830 7 Recalculate Interest Interest expense April May S 108 S 142 S June Quarter Total 142 S 392 (13000*10%)/12 (17000*10%)/12 (17000*10%)/12 First Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2021. Cash Accounts Receivable Inventory Prepaid Insurance Net Fixtures Total Assets First Store Balance Sheet March 31, 2021 Assets $1,000 $25,000 $29,400 $1,800 $25,000 $82,000 Liabilities Accounts Payable $25,480 Dividend Payable $5,000 Total Liabilities $30,480 Common Stock Retained Earnings Total Liabilities and Stockholders' Equity Stockholders' Equity $15,720 $36,000 $51,720 $82,200 Actual and forecasted sales for selected months in 2021 are as follow: Month January February March April May June July Sales Revenue $60,000 $50,000 $40,000 $50,000 $60,000 $70,000 $90,000 Monthly operating expenses are as follows, but note you will need to compute the monthly insurance expense: Wages and salaries Depreciation Utilities Rent Prepaid insurance was made for the upcoming $25,000 $200 $1,000 $2,000 6 months Cash Dividends are declared during the third month of each quarter and are paid during the first month of the following quarter: $5,000 Operating expenses, except insurance and depreciation are paid monthly. Cost of goods sold is equal to 49% of sales revenue in month of sale. Ending inventories are sufficient for 120% of next month's cost of sale. Purchases during any given month for merchandise are paid full during the following month. All sales are on account. 50% collected during month of sale 40% collected during the next month after sale 10% collected the second month after sale The company requires a minimum cash balance of $1,000 at the beginning of each month If there is a cash deficiency the company will take out short-term financing so that the ending balance at the end of the month will meet the company requirement for a minimum cash balance. New Loans will be repaid if excess cash is over the required minimum cash balance in increments of $1,000 at an annual interest rate of 12% or monthly of 1.00% At the time the principal is repaid, interest is paid on the portion of principal that is repaid. All borrowing is at the beginning of the month, and all repayment is at the end of the month. Therefore, interest is incurred the month of the borrowing and thereafter until paid at the end of the month when there is sufficient funds to pay off more than $1,000. Total of BS of Assets side in question given $82,000 while it comes $82,200 No repayment of loan and payment of interest. 1 Step 1 Prepare a Purchase Budget First Store Purchase Budget For the quarter ending June 30, 2021 April May June Quarter Total Calculations Budgeted Sales (As provided on Part1) S 50,000 $ 60,000 $ Current Cost of goods sold S 24,500 S 29,400 S Desired ending inventory S 35,280 $ 41,160 $ Total inventory needs S 59,780 S 70,560 $ 70,000 $180,000 34,300 S 88,200 52,920 S 52,920 87.220 50000*49% 29400*120% =60000*49% =70000*49% =34300*120% =90000*49%*120% 141,120 S 29,400 $ 35,280 S 41,160 $ 29,400 24500*120% S 30,380 $ 35,280 S 46.060 111,720 Less beginning inventory Budgeted Purchases 2 Step 2 Prepare Cash Receipt Schedule First Store Schedule of Budgeted Cash Collection For the quarter ending June 30, 2021 April May June Quarter Total Calculations 50% of current month's sales S 25,000 $ 30,000 S 35,000 $ 90,000 50000*50% =60000*50% =70000*50% 40% of last month's sales $ 16,000 S 20,000 $ 24,000 $ 60,000 =40000*40% =50000*40% =60000*40% 10% of sales two months prior S 5,000 S 4,000 $ 5.000 $ Total cash receipts S 46,000 $ 54,000 S 64,000 14,000 50000*10% 164,000 =40000*10% =50000*10% 3 Step 3 Prepare a Cash Disbursement Schedule First Store Schedule of Cash Disbursements For the quarter ending June 30, 2021 April May June Quarter Total Purchase of merchandise prior month S Current cash operating expenses S 25,480 $ 28,000 S 30,380 S 28,000 S 35,280 S 91,140 28,000 $ 84,000 (25000+1000+2000) Cash dividends S 5,000 Total cash disbursements S 58,480 $ 58,380 $ S 5,000 63.280 $180,140 4 Step 4 Prepare a cash budget First Store Cash Budget For the quarter ending June 30, 2021 Calculations April May June Quarter Total Calculations Cash balance, beginning S 1,000 $ 1,520 S Total cash receipts (See Budget #2) S 46,000 $ 54,000 S Total cash disbursements (See Budget #3) S 58,480 $ 58,380 $ Excess (Deficiency) cash available over disburse $ (11,480) $ (2,860) S 1.140 S 64,000 $164,000 63.280 1,860 1,000 180.140 (15,140) Short tem financing: New loans S 13,000 $ 4,000 S 17.000 Repayments S S Interest S S Cash balance, Ending S 1.520 S 1.140 S 1,860 S 1.860 5 Step 5 Prepare budget income statement First Store Budget Income Statement For the quarter ending June 30, 2021 April May June Quarter Total Calculations Sales Cost of Sales S 50,000 $ 60,000 $ 70,000 180,000 S 24,500 S Gross profit S 25,500 $ 29,400 S 34,300 S 30,600 S 88,200 35.700 S 91,800 Expenses: Wages and salaries expenses S 25,000 $ 25,000 $ 25,000 $ 75,000 Depreciation expense Utilities expense Rent expense Insurance expense S 200 $ $ 1,000 $ 200 S 200 S 600 1,000 S 1,000 S 3,000 S 2,000 $ 2,000 $ S 300 $ 300 S Interest expense S 130 S 170 S 2,000 S 300 S 170 S 6,000 900 =1800/6 470 (13000*12%)/12 = (17000*12%)/12 S 170 Total expenses S 28,630 S Net income S (3,130) S 28,670 S 28,670 S 1,930 S 7,030 S 85,970 5,830 6 Step 6 Prepare a budgeted balance sheet First Store Budgeted Balance Sheet June 30, 2021 Assets Liabilities Cash S 1.860 Accounts payable $ 46,060 Accounts receivable Inventory S 41,000 S 52.920 Dividend payable S 5,000 Loan payable $ 17.000 Prepaid Insurance S 900 Interest payable S 470 Net Fixtures S 24,400 Total liabilities S 68.530 Stockholders equity: Common stock S Retained earnings S 15,720 36,830 $ 52,550 Total assets $ 121,080 Total liab. And stockholders S 121,080 AR ending balance: Beg. AR $ 25,000 Add quarter sales $ 180,000 Less collection from AR $ 164,000 Ending AR S 41,000 Prepaid Insurance: Beg. S 1.800 S S 900 900 Less expired Ending balance Net Fixtures: Beg. Less dep Ending Retained earnings: Beg. Add net income Less dividend Ending sss 25,000 600 24,400 $ 36,000 S 5,830 S 5,000 $ 36.830 7 Recalculate Interest Interest expense April May S 108 S 142 S June Quarter Total 142 S 392 (13000*10%)/12 (17000*10%)/12 (17000*10%)/12 First Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2021. Cash Accounts Receivable Inventory Prepaid Insurance Net Fixtures Total Assets First Store Balance Sheet March 31, 2021 Assets $1,000 $25,000 $29,400 $1,800 $25,000 $82,000 Liabilities Accounts Payable $25,480 Dividend Payable $5,000 Total Liabilities $30,480 Common Stock Retained Earnings Total Liabilities and Stockholders' Equity Stockholders' Equity $15,720 $36,000 $51,720 $82,200 Actual and forecasted sales for selected months in 2021 are as follow: Month January February March April May June July Sales Revenue $60,000 $50,000 $40,000 $50,000 $60,000 $70,000 $90,000 Monthly operating expenses are as follows, but note you will need to compute the monthly insurance expense: Wages and salaries Depreciation Utilities Rent Prepaid insurance was made for the upcoming $25,000 $200 $1,000 $2,000 6 months Cash Dividends are declared during the third month of each quarter and are paid during the first month of the following quarter: $5,000 Operating expenses, except insurance and depreciation are paid monthly. Cost of goods sold is equal to 49% of sales revenue in month of sale. Ending inventories are sufficient for 120% of next month's cost of sale. Purchases during any given month for merchandise are paid full during the following month. All sales are on account. 50% collected during month of sale 40% collected during the next month after sale 10% collected the second month after sale The company requires a minimum cash balance of $1,000 at the beginning of each month If there is a cash deficiency the company will take out short-term financing so that the ending balance at the end of the month will meet the company requirement for a minimum cash balance. New Loans will be repaid if excess cash is over the required minimum cash balance in increments of $1,000 at an annual interest rate of 12% or monthly of 1.00% At the time the principal is repaid, interest is paid on the portion of principal that is repaid. All borrowing is at the beginning of the month, and all repayment is at the end of the month. Therefore, interest is incurred the month of the borrowing and thereafter until paid at the end of the month when there is sufficient funds to pay off more than $1,000.